SWOT analyses are a much-maligned framework. And I confess to having been among the hecklers. In fairness, I respect the methodology, but I hate its use as a synonym for “strategy”.
Let’s define terms. A SWOT is a framework for assessing key aspects of an organization’s position. The initials stand for Strengths, Weakness, Opportunities and Threats, and the model is simple. Using a 2 by 2 matrix, for each category, assess your organization and list your insights in the correct box.
If done well, you gain a set of insights that can drive strategic thinking. When you then develop your strategy, it should leverage your strengths, seize upon the right opportunities, neutralize the threats, and compensate for any weaknesses.
Unfortunately, when leaders perform their own SWOTs prior to (say) a strategic planning event, I have found them too superficial to be useful. And dedicating a day of a retreat to developing a rigorous SWOT is a big reach.
Polaroid vs. Hologram
Part of SWOT’s weakness is inherent. It is a snapshot of a specific moment. So, even if you do a very thorough analysis, you’re still only documenting that one moment and what you think its implications are.
Tomorrow or next month the entire SWOT will likely look different. And there is no framework to capture that evolution.
I was discussing SWOT with some fellow strategist friends (see the PS). They sparked my imagination with their descriptions of the value of SWOT—or least, its value when done well. That led to another idea!
What if you were to take your normal SWOT analysis and parse it through multiple perspectives—and extend it over time; over ALL time.
That iteration becomes a permanent and ongoing structure.
Imagine a cash ledger. It memorializes each transaction. But it also shows you the total amount of cash-on-hand right now—that is to say, the current snapshot.
A SWOT ledger is also both archival and current. It shows you all the observed insights in those key dimensions, but also the current SWOT.
Who Owns the Ledger?
Ideally, somebody in the organization is tasked with keeping their eye on the strategic horizon. This role rarely exists and instead, falls to the Founder, CEO, or another executive. But this is a role that ought to exist as a standalone. Let’s call that person the Futurist. The futurist’s remit is to track the market, the company’s observations, the employee insights, the regulatory framework, competitors, and much more. The futurist owns the SWOT Ledger.
Each new insight that rises to a prescribed level of salience goes on the ledger.
The Departmental SWOT Ledger
Is this all a bit abstract? Ok, let’s look at an example—but at a departmental level (YES, if you lead a team, you should develop strategy.) The SWOT Ledger model can help.
An engineering team is planning how to build the underlying technology for a new cloud-based platform. Traditionally, they would use a standard “monolithic” design, with all the code in one big chunk. It’s a familiar way to build.
But, with the SWOT ledger, they are watching for trends and documenting new tools. In their “Threat” column they recognize that competitors are faster than they are to add new features. Further, they can see that because their tech stack is monolithic, they can’t move as fast. Their own infrastructure may be a weakness.
Having done this analysis, the team decides not to build a monolith, but instead to develop modularly.
That’s exactly the kind of thinking that led Uber to transition away from its own monolith to a micro-service architecture in 2011. They could see how it would make them more scalable and able to add new services later—like food delivery.
When you look post facto at an Uber SWOT Ledger, you see that their strengths included top engineering talent and first mover advantage. So, with those two insights, making the decision to invest in the extensive transition made sense.
The Futurist’s Remit
One job for the futurist is to monitor the placement of insights. Threats become opportunities; strengths can turn out to be weaknesses. It’s easy to imagine a SaaS platform for which AI is a threat as competitor’s claim they are adding it; but then, the team learns that there’s a strong AI potential partner with an API. They see that that could transform the company’s platform. The threat has become an opportunity.
By owning the SWOT ledger and constantly updating it with insights from ongoing research, conversations and analysis, the ledger itself becomes a living well of strategic insight. Whenever the futurist notices that an insight has changed the positioning enough to matter, she signals a need to revisit the strategy.
If you notice valuable changes earlier, their value compounds.
In the 1990s, open-source software like Linux was growing as an alternative to proprietary operating systems like IBM’s. As often happens, incumbents like IBM saw that trend as a threat. After all, giant mainframe systems were expensive and hard to replace. That made them lucrative. Open-source systems were neither expensive nor permanent. Couldn’t they displace the IBM OS?
A decade later, in 2001, IBM shifted their perspective. They invested $1 billion to promote Linux. In contrast to their competitors, they positioned themselves as a leading provider of Linux expertise and even modified their existing infrastructure (middleware, development tools, etc.) to support Linux systems.
It was a lucrative decision. By 2009, IBM was making $2 billion annually from Linux-related products and service—as much as 40% of their revenue.
But imagine IBM had been using a SWOT Ledger! If they had seen the same insight just three years earlier, it could have been worth an extra $4b or $5b in cumulative revenue (based on their later trends).
Formalize Your Mental SWOT Ledger
Every leader is always performing a mental SWOT. So, in a way, the Ledger already exists. But informal processes are sloppy. They don’t capture subtlety. And they’re private. A formal document lets others collaborate. An insight that seems anodyne to the futurist, may trigger recognition in the CRO, who identifies a whole new market opportunity.
How are you capturing the ever-changing strategic landscape of your organization? Are you? Maybe it’s time to begin a ledger of your own!
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